* Crown, forint benefit from long zloty cross unwinds
* Forint extends post-election rally, bonds correct
* Zloty supported by PM aide intervention comments
* Prague stocks jump, near pre-crisis levels
(Adds Polish finmin comments)
By Dagmara Leszkowicz and Marius Zaharia
WARSAW/BUCHAREST, April 14 (Reuters) - The Czech crown hit a
seven-month peak and Hungary's forint climbed to one-month highs
on Wednesday, tracking global equities, while the zloty rose as
intervention fears eased.
Strategists expect a recovery in central European exports
will help fuel gains this year in the region's currencies, which
have already rallied since the beginning of 2010, while strong
corporate results have also boosted sentiment.
But questions have arisen on whether stronger currencies
could hurt recovery prospects and the Polish central bank
surprised markets last Friday with its first intervention since
introducing a free float in 2000.
The prime minister's top economic adviser Michal Boni said
on Wednesday that Poland may not need to intervene further in
the currency market. [] Later, deputy finance
minister Dominik Radziwill said investors should still take the
possibility of interventions into account. []
At 1530 GMT, the zloty <EURPLN=> was bid 0.3 percent up on
the day at 3.859 per euro and was little changed after
Radziwill's comments. Dealers said Boni's comments may suggest
the bank has not yet decided to intervene further.
The forint <EURHUF=>, the crown <EURCZK=> and Romania's leu
<EURRON=> were all up 0.2-0.5 percent.
While the zloty's appreciation will likely cool in the short
term, some analysts say markets will probably push the central
bank into another intervention.
"The more currency strength you get in this current economic
environment, the more these economies will be at risk of
disappointing readings ... and slowdown in growth momentum,"
said Michal Dybula, economist for central and eastern Europe at
BNP Paribas. "They will not hesitate to use (intervention)."
The zloty's reversal, after rallying more than 6 percent
gains this year, has boosted peers the crown and forint as
investors square long zloty positions against them.
The forint and Hungarian bonds have rallied this week after
a sweeping first round election win for the centre-right Fidesz
party, which gained a near two-thirds majority needed to push
through vital reforms. []
Markets still price in a 25 basis point interest rate cut on
April 26, one day after the election's second round. The central
bank's minutes indicated that the end of the rate-cutting cycle
was uncertain. []
"I think the cuts will continue further, perhaps even below
5 percent," one dealer in Budapest said.
Bond yields ticked up on profit taking after dropping around
50 basis points since Sunday's election.
POLAND RESILIENT
Polish markets have held up following the Saturday crash of
a government plane that killed President Lech Kaczynski, central
bank Governor Slawomir Skrzypek and other senior officials.
The bank's acting governor Piotr Wiesiolek told daily Gazeta
Wyborcza on Wednesday the country should name a new central bank
head without unnecessary delays. []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
* For stories on the Polish crash and its aftermath please
double click on []
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Polish bonds trimmed some of their previous gains, but were
still stronger compared to Tuesday's levels. Poland sold 3.51
billion zlotys worth of 10-year bonds in a well-bid primary
tender on Wednesday. []
The Prague bourse <> jumped almost 3 percent to levels
last seen at the start of the financial crisis in September
2008, led by a 21.4 percent rise in miner New World Resources
<NWRSsp.PR> after the company booked much higher contract prices
over the next year. []
--------------------------MARKET SNAPSHOT--------------------
Currency Latest Previous Local Local
close currency currency
change change
today in 2010
Czech crown <EURCZK=> 25.054 25.113 +0.24% +5.05%
Polish zloty <EURPLN=> 3.859 3.871 +0.31% +6.35%
Hungarian forint <EURHUF=> 262.26 263.6 +0.51% +3.08%
Croatian kuna <EURHRK=> 7.256 7.27 +0.19% +0.73%
Romanian leu <EURRON=> 4.138 4.144 +0.14% +2.4%
Serbian dinar <EURRSD=> 99.61 99.37 -0.24% -3.74%
Yield Spreads
Czech treasury bonds <0#CZBMK=>
3-yr T-bond CZ3YT=RR +1 basis points to 61bps over bmk*
7-yr T-bond CZ7YT=RR -1 basis points to +68bps over bmk*
10-yr T-bond CZ10YT=RR -4 basis points to +55bps over bmk*
Polish treasury bonds <0#PLBMK=>
2-yr T-bond PL2YT=RR -3 basis points to +343bps over bmk*
5-yr T-bond PL5YT=RR +2 basis points to +291bps over bmk*
10-yr T-bond PL10YT=RR -2 basis points to +241bps over bmk*
Hungarian treasury bonds <0#HUBMK=>
3-yr T-bond HU3YT=RR +5 basis points to +416bps over bmk*
5-yr T-bond HU5YT=RR +5 basis points to +357bps over bmk*
10-yr T-bond HU10YT=RR +5 basis points to +325bps over bmk*
*Benchmark is German bond equivalent.
All data taken from Reuters at 1730 CET.
Currency percent change calculated from the daily domestic
close at 1600 GMT.
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(Reporting by Reuters bureaus, Writing by Jason Hovet and
Marius Zaharia; Editing by Susan Fenton)
